The land on John Gorton Drive was limited on sale to a maximum of 212 dwellings but now 270 units will be built. Developer Geocon's project was approved by the ACT Planning and Land Authority subject to a crown lease variation to allow for the extra dwellings.

The government said the dwelling limit set on territory land for sale was not an absolute maximum and a developer could choose to seek a lease variation after settlement.

The Observatory Living project is the largest multi-unit site in the suburb and it will consist of seven buildings ranging in height from four to six storeys.

The single six-storey building, which will contain 90 units, will be a landmark identifier while the others will scale down to meet single- and double-storey housing behind the complex.

The development will surround a central courtyard.

Geocon paid $9.2 million for the 21,170 square metre site in October 2011.

Managing director Nick Georgalis said the development's approval was an important milestone for the project and construction would begin soon.

Presale targets had been met and minor works had begun at the site.

''There has been a great response from a range of buyers at Observatory Living but the biggest uptake has been from first-home buyers and those looking to downsize to an apartment that still feels like a house,'' he said.

Mr Georgalis previously told The Canberra Times the added units would bring down the cost of body corporate fees for owners.

The Coombs and Wright Concept Plan sets out a density of 106 to 212 dwellings for the multi-unit site - one dwelling per 200 square metres of land is considered minimum density.

The Planning and Land Authority's notice of decision document for the development application states that ACT legislation allowed for an increase in dwellings provided the variation is consistent with the territory plan.

The document says the development was assessed against the relevant Coombs and Wright Concept Plan, the Wright Precinct Code, the Multi-Unit Housing Development Code and various other provisions of the Territory Plan, and ''an increase in the number of units is considered acceptable''.

Land Development Agency chief executive David Dawes said the dwelling ratio determined during the preparation of the estate development plan for the new suburb demonstrated the downstream infrastructure had sufficient capacity for a dwelling ratio of 50 to 100 dwellings a hectare.

But he said the 100 dwellings a hectare was not an absolute maximum and did not ''artificially constrain the outcome'' as a developer could choose to seek a lease variation after settlement.

''It acts as a limit during the sales process, thereby enabling all potential purchasers of the site to tender on a level playing field,'' Mr Dawes said.

''Any lease variation will be assessed by ACTPLA (ACT Planning and Land Authority), including against capacity of infrastructure, and there is an opportunity for the territory to capture the value of any uplift in dwelling numbers via the lease variation process.''